British Telecom is understood to have received a cold reception from Beijing on its planned GBP34 billion (about HK$400 billion) merger with Cable and Wireless, the international group which owns 57.5 per cent of Hongkong Telecom.
Talks are under way in Beijing with a British Telecom delegation, overseen by director of international operations Alfred Mockett.
The British Telecom team is thought to be hopeful progress can be made.
Beijing's tacit approval is regarded as important, because British Telecom wants to ensure Hongkong Telecom continues as China's preferred partner while its telecommunications network develops.
Hongkong Telecom has been commissioned to build a fibre-optic link between Beijing and Hong Kong, and to develop a mobile phone network in Beijing.
The company is regarded as having good relations with China's Ministry of Posts and Telecommunications.
British Telecom sees the Hongkong Telecom element of a merger as crucial in its ambitions to link up with a large Asian player.
